Paying off smaller SL or pay down larger SL. Does it matter?

[Anonymous]

It’s income tax return time and I have an extra 1k to put towards my SL. I plan to by a house in six months and want to lower the balances. I have 5 SL through College Foundation of North Carolina for $1630, $1286, $499, $244, $176.  My monthly SL payment is $120.  I have a total of ten open accounts including my CC.

Is there an advantage to paying off the smaller SL first? Are two installment accounts as good as five as far a FICO is concerned? I would love to see a 0 balance on a few of them if it will not ding my FICO score to bad.

[SCF]

I don't think paying off your loans will have any effect on your scores either way.  Since you'll still have installment loans open you won't lose any credit mix points, and installment utilization has a very minor effect on your scores.

In terms of prepping to buy a house, pay off any revolving balances to 1-9% of your CL, and then do what you can to bring your DTI (debt-to-income) down, which paying down your SLs will definitely accomplish if you don't have any CC debt.  You might also think about putting that 1k toward your down payment or other expenses, it may help you get better loan terms.

[Anonymous]

I would say to PIF the three smaller loans so they stop accruing interest and you can concentrate more on the larger ones. 

The psychological benefits of having 3/5ths of your loans paid in full can be far better than any FICO score or monetray benefit.

[MattH]

Pay more on whichever of your debts has the highest rate of interest first is the usual rule.